OREANDA-NEWS. Mitsui & Co., Ltd. and Mitsubishi Estate Co., Ltd. have agreed to move into the logistics facilities development business in China in partnership with Beijing Properties (Holdings) Limited of Hong Kong ("BPHL"). The Companies have concluded a shareholders agreement and a share subscription agreement providing for the acceptance of a third-party allocation of new shares issue by China Logistics Infrastructures (Holdings) Limited ("CLI"), a logistics facility developer and wholly owned subsidiary of BPHL.

The Companies will acquire a 35% stake in CLI through a newly established investment vehicle (60% owned by Mitsui, 40% by Mitsubishi Estate). The total equity participation in CLI will amount to approximately JPN 14.7 billion.

Demand for modern logistics facilities in China is rapidly increasing to keep pace with growth in consumption. Sophisticated logistics services are also becoming necessary due to the emergence and rapid growth of e-commerce. However, modern logistics facilities to meet these needs are not sufficient at present, and the demand for facilities is therefore expected to increase in the future.

The aim of this business is to provide high-quality logistics facilities to the Chinese market on a continuing basis by combining competitive capabilities for sourcing of development land and project management by BPHL, a Hong Kong listed state owned company under the Beijing Municipality Government, with the wide range of expertise of the Companies in development and leasing of logistic facilities as well as asset management for industrial REITs.

CLI will develop and acquire logistic facilities in strategic locations in key Chinese cities, with the targeting its asset size more than ?100 billion within 3-4 years after the participation of the Companies, which will pave the way to forming a new REIT comprised of the logistic facilities developed by CLI in the near future.

Mitsui sees this business as an opportunity to utilize its integrated strengths by combining its expertise related to logistics facilities development, logistics operations and financial business, including industrial REITs in Japan and Singapore. The company is also trying to deepen its involvement in property development business in China and the Asian countries.

The Mitsubishi Estate Group is expanding its business activities in Asia in addition to its real estate development and ownership in the United States and Europe. It established a subsidiary in Singapore in 2008 and opened a representative office in Shanghai, China in 2011, followed by the establishment of a subsidiary there in April 2013. Its activities in China have hitherto mainly focused on condominium and outlet malls projects, and furthermore it plans to enter into logistics and warehousing development business to diversify its activities and broaden its income base in China by leveraging its expertise and track record in logistics development projects in Japan and the United States.